State audit raises concerns about Gary's future without increase in tax caps

The comments are included in an audit of Gary's 2007 finances by the State Board of Accounts. In a summary letter, the auditors discuss Gary's financial future in light of new property tax laws.

"The amount of budget reductions that would be required for the city to fully implement the current tax legislation raises substantial doubt about the city's ability to continue as a going concern," auditors wrote in the report.

Auditors also write that the tax caps would put public safety services in jeopardy if the Indiana Distressed Unit Appeals Board doesn't help the city.

"Several essential public safety and health and welfare services would have to be transferred to Lake County,"?auditors wrote.

Bruce Hartman, state examiner and Board of Accounts member, is also a member of the Distressed Unit Appeals Board considering relief for Gary.

Mike Bozymski, deputy state examiner, said his auditors were not editorializing on whether Hartman and other appeals board members should vote for that relief.

"It's just part of the auditing standards," Bozymski said.

As part of the review, auditors pointed to several accounting irregularities and problems with internal controls at City Hall in 2007.

Among the auditors' concerns was $2,393 in personal purchases on city credit cards. Another $28,346 in credit card purchases lacked sufficient supporting documentation, according to the report.

Mayor Rudy Clay declined to comment on the audit. He and members of his cabinet traveled to Indianapolis on Monday to make their appeal.

Studies vary on how much money Gary will lose under new tax laws. Early indications were that the caps would drain $36.7 million from the $63 million budget in 2009, but state numbers released Thursday set the loss at $24 million this year.

Gov. Mitch Daniels and appeals board chairman Ryan Kitchell have said Gary must first do all it can to cut its own budget before qualifying for "special treatment."